contract law essay

Tort law has encouraged a compensation culture

The first key point to address is whether there actually was a ‘compensation culture’ at all or merely the perception of one. If there was no such culture then obviously the act could have little impact save on the perception of the problem. Lunney (p.38) points out that many of the oft repeated cases of excessive compensation and the reactions to them were simply urban myths or exaggerations perpetuated by the media. Elliott (p.133) suggests that many of the institutions, who were cancelling activities, supposedly out of fear of claims, were doing so for simple financial reasons and using the litigation issue as a smokescreen. He demonstrates that claims under tort were going down at the date the bill was introduced. That being said, so prevalent was the media hysteria concerning the compensation culture that the “government wanted to nip in the bud any suggestion or perception that such a culture was developing" (Lowther, p.43). Even the perception of a compensation culture alone was enough to restrict activities and affect people’s behaviour in other ways. The Compensation Act attempted to address these issues in three key ways.

Part 1 of the act simply states that courts when deciding whether a duty of care was breached and what acts a particular defendant might take to avoid such a breach, should “have regard as to whether a requirement to take those steps" might “prevent a desirable activity from being undertaken" or discourage people from undertaking such activities. This is a reminder to the judiciary – and a statement to the public - that social utility is often more important than the risks people assume. School trips, for example, give young people vital experience, develop independence and provide enjoyment and this must be taken into account when deciding on negligence claims. The definition of “desirable activities" is obviously broad but could include everything from a doctor stopping to save someone’s life to the above mentioned school-trips.

Part 1 of the act also states that “An apology, an offer of treatment or other redress shall not of itself amount to an admission of negligence or breach of statutory duty". The purpose of this is clearly to avoid defensive actions by potential defendants who might otherwise simply apologise or offer a simple form of redress after an incident. This behaviour is now statutorily protected and done without prejudice to any legal action and this alone should encourage a more socially positive attitude. Paradoxically if people behave in a way because of the fear of litigation then this may very well encourage litigation if a potential claimant felt aggrieved.

Part 2 of the act dealt with claims management services which were heavily advertising in recent years and creating a belief that ‘easy money’ was available and because it was a case of ‘no win no fee’ then claimants had nothing to lose by trying to claim . Thus from Apr. 2007 those offering such services had to be authorised to do so and abide by a set of rules. These rules excluded the aggressive marketing techniques which were being employed by some firms such as ‘visiting’ victims in hospitals to try to initiate clams and surreptitious advertising in hospitals and doctors’ offices to achieve the same end.

To conclude, it is clear that whilst much of the media reports concerning a compensation culture were exaggerated the perception alone was capable of doing significant damage to society. The Compensation Act 2006 has not only regulated the claims management service thus weeding out its worst excesses, it has also ensured that he courts are cognisant that socially desirable activities should not be deterred by their application of tort law. Furthermore, simple restorative acts cannot be held against a person. Thus it can be said that the Compensation Act has limited and controlled a developing problem with a compensation culture.

Question 2

Part (a) (i):

Most claims in relation to this incident will likely be pursued until the tort of negligence which is described as “a breach of legal duty to take care which results in damage to the claimant." (Finch, p.4) In order for those injured to successfully sue under the tort negligence a four step procedure must be followed: the defendant must owe a duty of care, that duty of care must be breached by the defendant, the claimant must suffer damage/injuries as a result of that breach and the damage must not so unrelated and unconnected to that breach as to be described as ‘remote’ and so be unrecoverable. We will work through this model.

There is no need to establish a unique duty of care utilising Donoghue-v-Stevenson [1] or Caparo-Industries-v-Dickman [2] because it has clearly been established that motorists owe a duty of care to other road-users and those they may affect by negligent acts as per Roberts-v-Ramsbottom [3] and Nettleship-v-Weston. [4] The main difficulty here will be establishing that Amir did actually breach this duty he owed.

The law, as per Blyth-v-Birmingham Waterworks [5] requires a standard of care defined by what the proverbial reasonable man would do. This is an objective test that asks what a reasonable person would do in any particular situation. Normally the burden of proof is on the claimant to prove a breach of this standard of care. However, this is where difficulties will arise because of the lack of evidence of a clear breach of duty, all we know is that he worked all night and so might have been tired. In such instances the doctrine of res ipsa loquitur as per Scott-v-London-&-St-Katerine-Docks [6] would likely be applied. This allows the court to establish a breach of duty without prima facia evidence of such a breach. What the court requires is that three conditions are met (Finch, p.20); the article which caused the damage must be under the control of the defendant, the cause of the accident is not known and such an incident does not occur without negligence in the normal course of events. Applying this to our facts concerning Amir it is submitted that he was in control of the car, there is no logical explanation for swerving and crashing and such events do not occur without negligence Thus Amir will likely be held liable for the accident in tort and under The Wagon Mound (No.1) [7] he will be liable for all foreseeable consequences of his negligence which in this case would make him liable for all deaths and physical injuries caused by the car hitting the train.

In respect of fatal accident compensation this is covered by the Fatal Accident Compensation Act 1976 which is a narrow piece of legislation designed primarily to provide compensation to a restricted class of persons when the death of someone they were dependent, or potentially dependent, upon occurs (Cane, p.112). Anyone, wishing to claim under this act would have to fall into a specific category of relative, they would have to prove a negligent act in tort (as above) and they also have to prove they were financially dependent on the deceased. Apart from this a partner, spouse or child under 18 could also claim for “damages for bereavement" under the Act even if they were not dependent on them (O’Hare, p.49).

Part (a) (ii):

The defendant in any claim here would not be Amir’s estate but rather Amir’s estate and his insurance company whom he had contracted with to provide insurance cover for his driving. If Amir did not have any insurance then the Motor Insurance Bureau would be the defendant under their agreement with the Department of Transport as they have agreed to ‘stand in the shoes’ of any uninsured and untraced drivers (Oughton, p.58).

Part (b) (i):

If Amir’s breach of duty has been established then he would be liable for all the foreseeable consequences of his negligence as per The Wagon Mound (No.1) [8] . This would include the personal injuries to Betty which was a foreseeable consequence of his negligence. The standard test to apply for linking a negligent act to damage was established in Cork-v-Kirby Maclean [9] and asks ‘but for" defendant’s negligence would the injury or damage have occurred?’ This test is met in relation to her injuries from the flying glass i.e. but for the car swerving off the road she would not now have a cut hand. However, Betty was accidentally given a tetanus injection by Nurse Cathy which ultimately caused her death. This raises the doctrine of novus actus interveniens, which means that the defendants would likely claim that it is Betty’s negligent act which has intervened and broke the chain of causation linking Betty’s death to the negligent act by Amir.

In respect of third-patties it was established in The Oropesa [10] that “the defendant will remain liable if the act of the third party is not truly independent of the defendant’s negligence" (Lowther, p.46). Furthermore, in Knighley-v-Johns [11] it was held that acts which are “the natural and probable results of the (first) wrongful act" will not break the chain of causation. Applying this to Betty’s case it is Amir’s negligent act which first put Betty in the hospital where she was exposed to this risk. The NHS is imperfect and as everyone knows mistakes and accidents do occur. Thus it is submitted that whilst the nurse was negligent such negligence is foreseeable and it is unlikely to break the chain of causation. The ruling in Robinson-v-Post Office [12] would appear to confirm this. In that case an injection which caused a violent reaction was held to be still the responsibility of the original defendant who caused Mr. Robinson to require medical care in the first place. Betty’s family would likely have a successful claim in tort against Amir’s insurance company for her death.

Part b (ii):

It is a well-established principal that “danger invites rescue"(Hedley,p.80) and defendants can be held liable if it was foreseeable that danger would be created and rescuers might come to their aid. In the case of Baker-v-TE Hopkins & Son [13] a rescuer was overcome by fumes attempting to rescue another person and died and the claim was allowed. The only likely situation where a rescuer will not be able to claim is where there was no actual danger as in Cutler-v-United Dairies [14] . Applying this to our facts it obvious that the consequences of Amir’s negligence would invite rescuers and Dev is one of those people. The physical injuries he suffered from the car exploding will most likely be recoverable. The fact that the police warned him to stay away might raise the defence of violenti non fit injuria (i.e. there can be no injury to one who consents) in that a defendant might claim Dev voluntarily took the risk of injury as in Morris-v-Murray. [15] This would require that Dev had specific knowledge of the risk and took it anyway. However, it is clear that the courts “will be sympathetic to a claimant who makes a wrong decision in the agony of the moment" (Lowther,p.217) as per Jones-v-Boyce [16] and are unlikely to penalise such a claimant who was attempting rescue in a dangerous situation by rejecting his claim for injury. He is likely to have a successful claim for his injuries and any consequential loss contingent upon them such as loss of income.

Part b (iii):

Gavin’s situation raised the issue of when recovery for psychiatric injury is possible under tort law. Psychiatric injury (PI) is recoverable once it is a reasonably foreseeable result of the negligence as per McLoughin-v-O’Brian, [17] however because of the fear of near unlimited liability in certain circumstances the courts have established control devices in the form of restricted rules on who can claim and for what. First, the PI must be recognisable as per Leach-v-Chief Constable of Gloucestershire Constabulary [18] . We are told that Gavin is “grief stricken" which raises difficulties. The courts do not allow for normal grief which is held to be part of life, but allows for “pathological grief" as per Vernon-v-Bosley (No.1) [19] . It is uncertain if Gavin falls into this category.

Second, in order to control who can recover for PI clear rules were established as to whom a duty of care is owed as per Alcock-v-Chief Constable of South Yorkshire. [20] Victims are normally divided into ‘primary’ and ‘secondary’ victims. Primary victims are those who are directly involved in the incident and were exposed to danger and suffered injury or risked suffering it i.e. they are within the physical sphere of danger and suffer a PI. This obviously excludes Gavin who must then attempt to be included in the secondary category. Secondary victims must witness injury to those they have close ties of love and affection with and they must be temporally and spatially proximate to the incident and witness the events with their own unaided senses. This would present enormous difficulties for Gavin as he was not physically present at the incident and furthermore as a “girlfriend" there is no presumption of close ties of love and affection. Gavin could prove this to the court possibly demonstrating the length of time they were together, whether they planned to marry or possibly if they have children. In respect of not being present at the incident this presents greater problems and the only exception is the case of McLoughlin. [21] In that case a mother arrived at the hospital soon after the ambulance did and witnessed such horrific scenes involving her husband and children at the Emergency Room that the judge held that held that effectively the scene of the crash had been transported to the ER. It is highly unlikely, on the facts that Gavin falls into this category. Thus it is submitted that Gavin’s claim under tort is unlikely to be successful.

Part b (IV):

Harris’s situation raises the issue of claims for economic loss. Economic loss “refers to financial losses which are not attributable to physical harm caused to the claimant or his property."(Finch, p.40) Because of the risk of unlimited losses as discussed in Ultramares Corp-v-Touche [22] the courts established a “bright line" rule in Spartan Steel and Alloy Ltd-v-Martin & Co. [23] and clearly differentiates between economic losses consequent on physical damage and pure economic loss unrelated to the physical damage. In that case an electrical cable was severed to a steel mill and recovery was allowed for the damage done to the steel currently being made, the profit lost on that steel but not the potential loss of further profits that would have been made whilst the mill was closed. Applying this to Harris it is almost certain that the potential losses from the contract will fall within the latter category and no duty of care will be owed by Amir to Harris for this loss due to the traffic jam which he effectively had caused.

Part b (v):

Imran’s situation has elements of both Gavin and Dev in that he has suffered as psychiatric injury and that he was involved in the rescue. However, Imran has one critical difference in that he is a professional rescuer whose job it is rescue people in such circumstances and as a result of this he has suffered a psychiatric injury.

The first point to note is that Post Traumatic Stress Disorder is a recognisable PI and as such Imran would have a potential claim. However, the ruling in White and Others-v-Chief Constable of South Yorkshire [24] has raised serious difficulties for such claimants. In that case, four police officers who suffered PI as a result of the events at the Hillsborough football stadium and many people were crushed to death. It was presumed the court would treat them like other rescuers and as a matter of policy allow them to claim. However, the court ruled that in relation to PI rescuers such as the police must meet the Alcock criteria and must have been exposed or reasonably believed they were, to physical danger so as to be considered primary victims. If they were not exposed to danger then it would almost certainly find it impossible to claim as they would lack ‘close ties of love and affection’ with any of the people they were rescuing. Applying this to Imran in order for him to successfully establish a claim he would want to have been in physical danger. He fought the burning fire and there were explosions in the vicinity so it is reasonable to presume he can be held to be a primary victim. As such any recognisable PI would be claimable from Amir’s insurers. If Imran was not exposed to physical danger he could attempt to do what the officers in White did and that was to sue their employer under the duty of care which was owed to him (Elliott, p.52). However, this route was also rejected in White as the court said the same rules applied in respect of a duty owed to employees so they could not claim via this route. This opinion was confirmed in French and others-v-Chief Constable of Sussex Police [25]

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